Resale of Restricted and Control Securities
Chapters in this video
- 0:00 Why restricted shares can't be flipped tomorrow
- 1:47 Arthur the affiliate versus Norma the non-affiliate
- 3:08 Six month and one year holding period rules
- 4:09 Tacking: the clock does not reset
- 4:43 Affiliate volume cap formula and purpose
- 5:16 Form 144 is notice not a ceiling
- 6:38 Quincy the QIB and the institutional VIP lane
- 8:57 Rapid-fire exam recap
What this video covers
- Why the Securities and Exchange Commission (SEC) imposes holding periods on restricted securities, and how they prevent disguised public distributions
- The 6-month versus 1-year holding period rule, and why reporting issuers get the shorter timeline
- The difference between restricted securities (purchased in private placements) and control securities (held by affiliates), and why affiliate status matters more than how the stock was acquired
- How tacking lets a former affiliate count prior holding time toward the non-affiliate holding period without restarting the clock
- The affiliate volume limitation formula: the greater of 1% of outstanding shares or average weekly trading volume over the prior 4 weeks, and why it caps the seller not the buyer
- Form 144 filing triggers: 5,000 shares or $50,000 in any rolling 3-month period, and why Form 144 is a notice rather than a ceiling on sales
- The qualified institutional buyer (QIB) resale exemption: the $100 million standard threshold, the $10 million broker-dealer exception, and the $25 million bank net worth requirement
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